BDO sees sustained role as ‘domestic systemically important bank’

BDO Unibank Inc. (BDO), the Philippines’ largest bank in terms of assets, is optimistic that it will be able to support its medium-term targets and sustain its role as one of the “too big to fail” banks in the country with its strong capital base.

The Sy-led bank on Friday reported a net income of P26.1 billion in 2016 on the back of strong results across its core businesses.

In a statement, BDO reported that its capital base stood at P217.5 billion in 2016, with its capital adequacy ratio (CAR) and common equity tier 1 (CET1) ratio at 12.4 percent and 10.7 percent, respectively.

The bank also successfully completed its rights offer in January 2017 after it raised a total of P60 billion in fresh capital, boosting its consolidated CAR to an estimated 15.7 percent.

“This will allow the bank to support its medium-term targets and provide a comfortable buffer over higher minimum capital requirements with the staggered implementation of the domestic systemically important bank (DSIB) surcharge,” it said.

“With a strengthened capital base, robust business franchise and extensive distribution network, BDO is well-positioned to benefit from the country’s growth momentum,” it added.

Reporting on its 2016 performance, BDO said its customer loan portfolio increased by 16 percent to P1.5 trillion, while total deposits rose 15 percent to P1.9 trillion on the sustained growth in the bank’s low-cost current account/savings account deposits.

Net interest income rose 15 percent to P65.6 billion, reflecting the quality growth in the loan portfolio, it said.
Meanwhile, the bank said fee-based income grew 15 percent to P22.2 billion and insurance premium contributed P8 billion, as efforts at diversifying its income stream start to bear fruit.

These fee income sources compensated for the decline in trading gains to P4.8 billion. Overall, gross operating income settled at P107.2 billion, it said.

BDO said its operating expenses advanced by 27 percent to P70.1 billion, primarily reflecting the consolidation of One Network Bank (ONB) and BDO Life Insurance. Excluding these, operating expenses would have risen only by 11 percent.

The lender also set aside P3.8 billion in provisions for the year even as it noted that gross non- performing loan (NPL) ratio held steady at 1.3 percent while NPL cover remained high at 139 percent.